India e-commerce GST withholding tax

Indian e-commerce companies will face Tax Collected at Source (TCS) obligations on the new Goods and Services Tax regime due to launch in 2017. The rate could hit 2% on intra-state sales of goods and electronic services.

TCS is an Indian income withholding tax collected from suppliers by Indian e-commerce companies – such as Snapdeal and Flipkart - selling certain goods acquired for resale. The e-commerce business then declares and pays any TCS collected in a quarterly return to the tax authorities. The vendor of the goods is entitled to a credit on any TCS suffered, which they apply against other income tax return.

TCS is generally 1%, although a further 1% may be suffered on intra-state transfers according to the new GST legislation.

Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.